N.Y. Banking Law § 387: Credits to surplus account and undivided profits; dividends to shareholders

§ 387. Credits to surplus account and undivided profits; dividends to

shareholders. 1. When the net profits of any savings and loan

association have been determined at the close of an accounting period,

if its net worth does not equal ten per centum of its capital, such net

profits shall be credited to its surplus account in such amount as may

be determined by the superintendent of financial services until such net

worth equals ten per centum of its capital. For purposes of this

article, the term "net worth" shall mean the excess of assets at book

value, less allocated reserves, over known liabilities. The balance of

such net profits, together with any amounts remaining from similar

balances for previous accounting periods, shall constitute the undivided

profits of such savings and loan association at the close of such

period. The directors, in addition to the transfers to the surplus

account required by this section, may transfer additional amounts to

surplus account from undivided profits or continue to carry as undivided

profits such sum or sums as they may deem wise. Amounts heretofore

credited to a reserve for bad debts pursuant to chapter three hundred

nine of the laws of nineteen hundred fifty-two shall be transferred to

surplus account.

2. The undivided profits of a savings and loan association at the

close of an accounting period shall be available for dividends. The

directors may declare such dividends pursuant to the provisions of this

paragraph or for any annual, semiannual, quarterly or monthly period

closing on the last day of a calendar month or as provided in paragraph

(bb) of subdivision four of section three hundred seventy-eight of this

chapter. No association shall declare, credit or pay any dividend while

its capital is impaired, or at any time except by a vote of the board of

directors.

Notwithstanding the foregoing, in the event the gross income,

undivided profits, surplus account or net worth of a savings and loan

association shall be, or shall be deemed by the superintendent to be,

increased as a result of any loan, purchase of assets or guaranty by, or

other transaction with, any insuror of the accounts of such savings and

loan association, including a transaction subject to subdivision two of

section three hundred eighty-two-b of this article, the amount of any

such increase in the gross income, undivided profits, surplus account or

net worth of such savings and loans association shall, with the prior

written approval of the superintendent, be available for dividends.

4. Dividends shall be apportioned upon the dues and dividends credited

to members, provided, however, that, except in the case of special

savings shares, no dividend shall be required to be computed and paid

upon any dues credited to a member except from the first day of the

month immediately following the date of receipt of such dues, and

provided further, that no dividend shall be required to be apportioned

on shares having a book value of less than fifty dollars or on savings

shares issued for special purposes which by their terms are to be

withdrawn by the shareholder within one year from the date of their

issuance. Any such association may compute dividends upon dues credited

to a member from the date of actual receipt of such dues. The by-laws of

any such association may provide a schedule of varying rates of

dividends for different classes of shares and different types of shares

within any class.

5. No savings and loan association shall declare any dividends upon

the accumulations on any share for a longer period than that during

which such accumulations have been held; provided, however, that dues

paid upon shares not later than the tenth day of any month, may have

dividends declared thereon from the first day of the month in which such

payment was made; and withdrawals of shares during the last three

business days of any dividend period or, in the event that one of such

last three business days is a Saturday, deposits withdrawn upon one of

the last four business days of any dividend period may receive dividends

apportioned for the full period.